Kosmos ADVOCACY

Kosmos occasionally engages in public policy discussions occurring globally on energy, corporate responsibility, and transparency, publishing statements and brochures reaffirming our belief that our approach to transparency helps us manage social and political issues, establishing Kosmos as a partner of choice and mitigating barriers to growth.

Transparency

Transparency in Exploration and Production

Kosmos believes resource revenues are more likely to be managed in the best interests of a country if payments and receipts are made transparently, and if accountability measures are in place for the use of these revenues. Ideally, this process is underpinned by a national dialogue in which industry plays its part as a partner with government and civil society. Kosmos is committed to advocating for transparency in our dealings with host governments.

EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE

Kosmos is a Supporting Company of the Extractive Industries Transparency Initiative (EITI), a leading global standard that strengthens governance by promoting transparency and accountability in the oil, gas, and mining industries. For more information, please visit eiti.org/eiti.

PAYMENTS TO GOVERNMENT

In our Business Principles, we recognize the critical importance of resource revenues in contributing to sustainable development in our host countries.

Kosmos has disclosed its payments to governments on a country-by-country and a project-level basis since 2014. We believe that this type of disclosure is beneficial to investors, civil society, and local communities, and reflects evolving international expectations. We believe that our approach to transparency helps us to manage social and political issues, establishing Kosmos as a partner of choice and mitigating barriers to growth.

We commit to honesty in our declarations and will not allow any form of abusive transfer pricing. Where it is legally possible and acceptable to our host governments, we also prefer to make the material terms of our Petroleum Agreements (PAs) and Production Sharing Contracts (PSCs) publicly available. All of our PAs and PSCs have been filed with the Securities Exchange Commission and can be accessed here.

The tables below detail payments to governments made in 2017 and are prepared in accordance with the UK’s Reports on Payments to Governments Regulations 2014 (as amended in December 2015), with some voluntary additional reporting that we believe provides helpful further detail or contextual information.

(1) The Payments to Government data are reflective of direct payments made to government entities by Kosmos Energy on operated projects - with the exception of payments reported for KBSL and KTEGI as explained separately. Please see the footnotes below for further detail on the payments we made to our host country governments in 2017.

(2) Represents payments made directly to government for satisfaction of obligations per the Petroleum Agreements and/or Petroleum Sharing Contracts (PSCs), as applicable including payments made in Mauritania to support the management of environmental risks in a precautionary manner and to assist with capacity building.
In addition to the numbers above, Kosmos made payments to third party training providers and/or national oil company employees in accordance with training obligations per the PSCs totaling $83,000 for Morocco and $235,000 in Sao Tome.

(3) Primarily local payroll-related taxes and withholding taxes on interest payments in Ghana. These values are exclusive of withholding taxes remitted on behalf of service providers.

(4) Includes interest payments made to the Ghana Revenue Authority of $4.7 million. In addition to this, Kosmos Energy paid the US government $11.4 million in income tax payments during 2017.

(5) Primarily relates to donations made to the Ministry of Energy and Ministry of Trade in Ghana and payments to the port authority in Morocco for leased used of port facilities.

(6) Royalties are paid to the Government of Ghana in barrels of oil out of Kosmos' working interest share of production. Based on the annual average of daily Brent prices in 2017 of $54.19, this is worth approximately $33.2 million.

KBSL (Senegal) (7)

KTEGI (Equatorial Guinea) (8)

Production Entitlements (bbls)

—

—

Estimated Production Entitlements ($s)

—

$

—

$

Income Taxes

—

$

—

$

Royalties (bbls)

—

66,259

Estimated Royalties ($s)

—

$

$ 3,590,000 (9)

Dividends

—

$

Bonuses

—

$

License Fees (Surface Rentals, Permitting Fees, etc)

$ 49,000

$ 25,000

Infrastructure Improvement

—

$

—

$

Envt and Capacity Building

—

$

—

$

Training

$ 300,000

—

$

Taxes (Non-Income)

$ 208,000

$ 139,000

Other

—

$

—

$

Total

$ 557,000

$ 3,754,000

(7) Kosmos BP Senegal Limited (KBSL) represents a joint venture company which Kosmos Energy held a 50.01% interest in for the period March - October 2017 and 100% thereafter. Costs in this table represents Kosmos' participating interest in the joint venture.

(8) In late 2017, through a joint venture with an affiliate of Trident Energy, Kosmos Energy acquired all of the equity interest of an entity subsequently renamed Kosmos-Trident Equatorial Guinea, Inc. (KTEGI), which holds an 85% paying interest in the Ceiba Field and Okume Complex assets in Equatorial Guinea (Block G). Figures in the table represent Kosmos Energy's indirect 50% participating interest in KTEGI's payments to the government during December 2017.

(9) Royalties are paid to the Republic of Equitorial Guinea in barrels of oil out of Kosmos' working interest share of production. Based on the annual average of daily Brent prices in 2017 of $54.19 per bbl, this is worth approximately $3.59 million.

(1) The Payments to Government data are reflective of direct payments made to government entities by Kosmos Energy on operated projects - with the exception of payments reported for KBSL and KTEGI as explained below. Please see the footnotes below for further detail on the payments we made to our host country governments in 2017. These payments are categorized consistent with the Report on Payments to Governments Regulations 2014 (as amended in December 2015). These regulations enact domestic rules in line with Directive 2013/34/EU (the EU Accounting Directive (2013). Footnotes 6, 7, & 8 represent payments made in Senegal and Equatorial Guinea by joint venture companies of which Kosmos is a co-venturer.

Kosmos BP Senegal Limited ("KBSL") represents a joint venture company which Kosmos Energy held a 50.01% interest in for the period March - October 2017. KBSL was the operator for the two blocks offshore Senegal during this time. Costs in this table represents Kosmos' participating interest (50.01%) in KBSL. In the fourth quarter of 2017, BP took over as operator of the two blocks, exited its share of KBSL, and Kosmos became the non-operating partner with 33.33% participating interest per block.

Kosmos owns a 50% interest in the joint venture company Kosmos Trident International Petroleum Inc. ("KTIPI"). KTIPI holds an 85% participating interest in the Ceiba Field and Okume Complex through its wholly-owned subsidiary, Kosmos-Trident Equatorial Guinea Inc. ("KTEGI"), representing a 40.375% net indirect interest to Kosmos. Kosmos entered Equatorial Guinea when these companies were formed in the fourth quarter of 2017.

(2) Represents payments made directly to government for satisfaction of obligations per the Petroleum Agreements and/or Petroleum Sharing Contracts (PSCs), as applicable including payments made in Mauritania to support the management of environmental risks in a precautionary manner and to assist with capacity building. In addition to the numbers above, Kosmos made payments to third party training providers and/or national oil company employees in accordance with training obligations per the PSCs totaling $83,000 for Morocco and $235,000 in Sao Tome.

(3) Primarily local payroll-related taxes and withholding taxes on interest payments in Ghana. These values are exclusive of withholding taxes remitted on behalf of service providers.

(4) Includes interest payments made to the Ghana Revenue Authority of $4.7 million. In addition to this, Kosmos Energy paid the Internal Revenue Service of the United States Government $11.4 million in income tax payments during 2017.

(5) Primarily relates to donations made to the Ministry of Energy and Ministry of Trade in Ghana and payments to the port authority in Morocco for leased used of port facilities.

(6)ROYALTIES ARE PAID TO THE GOVERNMENT OF GHANA AND REPUBLIC OF EQUATORIAL GUINEA IN BARRELS OF OIL OUT OF KOSMOS' WORKING INTEREST SHARE OF PRODUCTION. BASED ON THE ANNUAL AVERAGE OF DAILY BRENT PRICES IN 2017 OF $54.19, THIS IS WORTH APPROXIMATELY $33.2 MILLION FOR GHANA AND $3.59 MILLION IN EQUATORIAL GUINEA.

(7) Kosmos BP Senegal Limited (KBSL) represents a joint venture company which Kosmos Energy held a 50.01% interest in for the period March - October 2017 and 100% thereafter. Costs in this table represents Kosmos' participating interest in the joint venture.

(8) In late 2017, through a joint venture with an affiliate of Trident Energy, Kosmos Energy acquired all of the equity interest of an entity subsequently renamed Kosmos-Trident Equatorial Guinea, Inc. (KTEGI), which holds an 85% paying interest in the Ceiba Field and Okume Complex assets in Equatorial Guinea (Block G). Figures in the table represent Kosmos Energy's indirect 50% participating interest in KTEGI's payments to the government during December 2017.

(1) The Payments to Government data are reflective of direct payments made to government entities by Kosmos Energy on operated projects - with the exception of payments reported for KBSL and KTEGI as explained below. Please see the footnotes below for further detail on the payments we made to our host country governments in 2017. These payments are categorized consistent with the Report on Payments to Governments Regulations 2014 (as amended in December 2015). These regulations enact domestic rules in line with Directive 2013/34/EU (the EU Accounting Directive (2013). Footnotes 6, 7, & 8 represent payments made in Senegal and Equatorial Guinea by joint venture companies of which Kosmos is a co-venturer.

Kosmos BP Senegal Limited ("KBSL") represents a joint venture company which Kosmos Energy held a 50.01% interest in for the period March - October 2017. KBSL was the operator for the two blocks offshore Senegal during this time. Costs in this table represents Kosmos' participating interest (50.01%) in KBSL. In the fourth quarter of 2017, BP took over as operator of the two blocks, exited its share of KBSL, and Kosmos became the non-operating partner with 33.33% participating interest per block.

Kosmos owns a 50% interest in the joint venture company Kosmos Trident International Petroleum Inc. ("KTIPI"). KTIPI holds an 85% participating interest in the Ceiba Field and Okume Complex through its wholly-owned subsidiary, Kosmos-Trident Equatorial Guinea Inc. ("KTEGI"), representing a 40.375% net indirect interest to Kosmos. Kosmos entered Equatorial Guinea when these companies were formed in the fourth quarter of 2017.

(2) Represents payments made directly to government for satisfaction of obligations per the Petroleum Agreements and/or Petroleum Sharing Contracts (PSCs), as applicable including payments made in Mauritania to support the management of environmental risks in a precautionary manner and to assist with capacity building. In addition to the numbers above, Kosmos made payments to third party training providers and/or national oil company employees in accordance with training obligations per the PSCs totaling $83,000 for Morocco and $235,000 in Sao Tome.

(3) Primarily local payroll-related taxes and withholding taxes on interest payments in Ghana. These values are exclusive of withholding taxes remitted on behalf of service providers.

(4) Includes interest payments made to the Ghana Revenue Authority of $4.7 million. In addition to this, Kosmos Energy paid the US government $11.4 million in income tax payments during 2017.

(5) Primarily relates to donations made to the Ministry of Energy and Ministry of Trade in Ghana and payments to the port authority in Morocco for leased used of port facilities.

(6) ROYALTIES ARE PAID TO THE GOVERNMENT OF GHANA AND REPUBLIC OF EQUATORIAL GUINEA IN BARRELS OF OIL OUT OF KOSMOS' WORKING INTEREST SHARE OF PRODUCTION. BASED ON THE ANNUAL AVERAGE OF DAILY BRENT PRICES IN 2017 OF $54.19, THIS IS WORTH APPROXIMATELY $33.2 MILLION FOR GHANA AND $3.59 MILLION IN EQUATORIAL GUINEA.

(7) Kosmos BP Senegal Limited (KBSL) represents a joint venture company which Kosmos Energy held a 50.01% interest in for the period March - October 2017 and 100% thereafter. Costs in this table represents Kosmos' participating interest in the joint venture.

(8) In late 2017, through a joint venture with an affiliate of Trident Energy, Kosmos Energy acquired all of the equity interest of an entity subsequently renamed Kosmos-Trident Equatorial Guinea, Inc. (KTEGI), which holds an 85% paying interest in the Ceiba Field and Okume Complex assets in Equatorial Guinea (Block G). Figures in the table represent Kosmos Energy's indirect 50% participating interest in KTEGI's payments to the government during December 2017.

(1) Figures are reflective of direct payments made to government entities by Kosmos Energy. These payments to the port authority in Morocco primarily for leased use of port facilities in the amount of $75,000.

(2) Production Entitlements in barrels represent non-cash royalties paid in barrels of oil out of Kosmos Energy’s working interest share of production. Based on the annual average of daily Brent prices in 2016, this is worth approximately $16.2 million.

(3) In addition to this, Kosmos Energy paid the U.S. government $11.7 million in income tax payments during 2016.

(4) Represent payments made directly to government for satisfaction of training obligations per the Petroleum Agreement and/or Petroleum Sharing Contracts (PSCs), as applicable. In addition to the numbers above, Kosmos made payments to third party training providers and/or national oil company employees in accordance with training obligations per the PSCs totaling $1.0 million for Morocco.

(5) Primarily local payroll-related taxes and withholding taxes on intestines payments in Ghana. These values are exclusive of withholding taxes remitted on behalf of service providers.

(6) Primarily relates to costs associated with withdrawing from the Tarhazoute Offshore Area of Interest in Morocco.

In October 2015, Kosmos submitted a comment letter to the United States Securities and Exchange Commission (SEC) as part of the SEC rulemaking process for Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which proposes requiring US-listed companies to disclose payments to US and foreign governments as a standard part of their reporting to the SEC. In our comment letter to the SEC, we highlighted our commitment to transparency, including our project-level disclosure in accordance with the EU Accounting Directive. A copy of this letter is available here. We reiterated our position on these topics with a further letter to the SEC in March 2018, available here.

Petroleum Agreements (PAs) and Production Sharing Contracts (PSCs)

Summaries of the key provisions of our various contracts with governments can be found here. The full text of our agreements can be found following the links below.